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Lyonnais prepared for sale
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May 27, 1999: 8:13 a.m. ET
Core holder group named, paving way for merger and overseas ties
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LONDON (CNNfn) - The French government pushed forward the privatization of Crédit Lyonnais Thursday by naming seven core shareholders and paving the way for an eventual merger with Crédit Agricole to create a new French superbank.
Nine banks and insurers applied for the 33 percent of CL available to a core group ahead of the planned sale of a 47 percent stake in July. This will leave the state with a 10 percent stake.
The banks chosen and the available share splits were broadly welcomed by analysts, though all the participants will await final pricing of the stakes before agreeing to make a final bid.
"The consortium members are not a surprise and this is exactly what the government and Crédit Lyonnais want to achieve," said Didier Valet, banking analyst at Dresdner Kleinwort Benson in Paris.
He said this paved the way for the a widely-anticipated merger with Crédit Agricole, the French mutual, to create the country's largest financial institution.
Crédit Agricole received the maximum 10 percent allocation in CL announced by French Finance Minister Dominique Strauss-Kahn. These included three non-French banks to help Crédit Lyonnais rebuild its overseas operations.
Two bids were excluded from the final round of bidding. As widely anticipated, Paribas was dropped because of the complication of its three-way merger battle with Banque National de Paris and Société Générale.
The messy takeover spat has embarrassed Strauss-Kahn, who has called publicly for the French banking community to stick together. Banques Populaire's bid for CL shares was also rejected.
Other members of the core group include the leading French insurers AGF and Axa, offered 6 percent and 5.5 percent respectively, and CCF, which was offered 1 percent.
Germany's Commerzbank was offered 4 percent, Spain's BBV 3.75 percent, and Italy's Banca Intesa 2.75 percent. "The three stakes for three foreign banks is a way for CL to build partnerships overseas," Valet said.
CL, which expanded aggressively in Europe in the 1980s, was forced to sell the operations as a condition imposed by the European Commission when approving a massive cash injection to stave off bankruptcy.
Commerzbank said it was happy with its potential allocation, though it had bid for 4 percent, but would await pricing news before making a final decision. The German bank has existing share links with Italy's BCI, a potential merger partner for Banca Intesa.
The pricing is expected to be based on the bids made by the nine banks that applied for shares, with the highest and lowest bids excluded and the average of the remaining used as the basis for final pricing.
Road shows for the sale of 47 percent are due to start in Jun, with the deal expected to be split 20 percent to retail investors and 27 percent to institutions. Market talk is of pricing in the range of 25 to 30 euros, valuing the bank at around 9 billion euros. Around 10 percent is already privately held and the government plans to retain a 10 percent stake with 10 percent reserved for employees. 
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